Stewarding Cash Reserves: How Much is Enough?

Have you heard some church leaders say that establishing church cash reserves displays a lack of faith in God?

In Jesus’ parable of the prosperous farmer in Luke 12:16-21, it is apparent that building bigger barns to selfishly store up many years of grain, goods, and earthly treasures is foolish. Yet not setting aside cash reserves ignores the biblical principle of storing funds for future times of need, such as Joseph preparing for the famine in Egypt. So, how much is enough when it comes to being a good steward and building cash reserves?  

Churches need to build cash reserves sufficient to smooth out the natural fluctuations of income and expenses, allowing the church to meet its obligations and operate with integrity. Cash reserves are needed to provide financial resources for unplanned actions such as replacing a major HVAC system or repairing a roof. Cash reserves or designated funds can also be maintained for unforeseen opportunities like buying a piece of land, planting a new church, developing a mission project, or preparing for a facility expansion.  Being a good steward of God’s resources and building cash reserves to prepare the church for future opportunities can position the church to take action they otherwise might miss.

Determining the appropriate amount of cash reserves depends on each church’s philosophy and anticipated future financial needs. We typically recommend churches consider three to six months of operating cash to buffer the ebb and flow of finances and unplanned expenses. If a church is preparing to engage in a significant project, raising 25% - 50% of the project costs in advance will reduce the impact of interest expenses on the church’s regular ministries.

If a church has inadequate cash reserves, its first stewardship step is to set a target (i.e., a dollar amount) and then develop a plan to build reserves over several months or years to meet that goal. Cash reserves provide a solid foundation for a stable and enduring local church or gospel ministry. Churches can steward resources and build cash reserves during financially good times as they receive more donations than expected or by proactively controlling expenses in order to set aside resources that can be utilized when times are financially difficult. Failing to prepare for future challenges and opportunities with adequate cash reserves can limit ministry efforts, pressure staff, and jeopardize the church’s future.  

There is a healthy tension between having faith in God to provide needed resources and our responsibility to steward financial resources to prepare for future times of need. Preparation for the future is essential, and so is the proper stewardship and utilization of resources today for kingdom purposes. So, let’s wisely utilize the resources God has provided while also taking steps today to prepare for tomorrow’s needs and opportunities!

Terry Jeffries | SBTF Director of Investment Services